- Economy : Environment : eBusiness -

The Wall Street Journal reports that demand is exceeding supply at top portals and premium web publishers. There's a fairamount of buzz among bloggers as well. According to the WSJ:

The surging demand is allowing big rate increases at the largest portals, the prime beneficiaries of the growth. Yahoo said last month that prices increased by "double digits" in the third quarter from a year earlier, while AOL says prices for some ad units have increased as much as 20% since January.

That's pretty consistent with what we've been seeing as well. Advertisers are clamoring to access the audiences that publishers have worked so hard to develop. Now these publishers are looking seriously at ways to maximize their revenue in this new context of rising demand.

So how can website publishers, large and small, ensure that their boat rises with the tide?

One approach is to auction off their inventory to the highest bidder. Our ActiveMarket technology is aimed directly at larger publishers, streamlining the bidding process and aggregating demand to ensure that the publisher gets the best possible price. And our BidClix advertising marketplace is a turnkey solution for smaller websites and bloggers to list their advertising opportunities publicly, tap into an existing pool of demand, and then let advertisers compete in real time. Smaller publishers might also consider Quigo, AdBrite, ContextWeb and Google AdSense but none of those are true auctions where the publisher can set a reservation price and take advantage of the magic of competitive bidding.

Another approach, for the largest of publishers, is to get scientific about setting their rate card prices, analyzing demand and supply over time and using that data to increase their bargaining position vis-a-vis their advertisers. Rapt Inc.'s Price Director is being used by Yahoo and iVillage in this way.

In many cases, markets do a pretty damn good job of setting prices (and in other cases they reallydon't). I believe that online advertising is one of those areas where markets work very well: buyers and sellers are best served when they can make their own decisions, fully informed.